Cinderella Incorporated is currently producing three lines of dresses. The data on each dress is as follows:

BLUE PINK ORANGE

Selling price $80 $56 $70

Variable expenses

Direct materials 24 15 9

Labour and overhead 24 27 40

48 42 49

Contribution margin $32 $14 $21

Contribution margin ratio 40% 25% 30%

The same material is used in each dress. The material costs are $3 per yard, with a maximum of 5000 yards available each month. Demand for the dresses is very strong with demands for 300 Blue; 1000 Pink and 500 Orange.

Required:

1. Can we meet the current demand of all dresses?
2. In which order would you accept orders and at what amounts?
3. How much would you be willing to pay for extra yardage in order to complete demand 100%?
4. Give two other alternatives for the company to meet demand.